Volvo Group Request to Pay Directive 2011 - External
Routines and conditions for invoice handling and supplier payments
in the Volvo Group
Introduction
The objective of this Directive is to secure efficient management of payments to suppliers
and to support a global purchasing process.
To enhance the understanding we recommend the terms and definitions section, appendix 1.
Why is Volvo Group Request to Pay instruction important?
Volvo Group´s ambition is to be regarded as a preferred and highly ranked customer.
Together with our suppliers we
continuously develop our relations, products and
administrative routines. A payment is a part of a business transaction.
To facilitate the relationship with our suppliers, Volvo Group strives to receive invoices from
and make payments to our suppliers in the most efficient way in order to minimize
administration for both parties and to avoid delay and bankfloat in payments.
Administration of supplier invoices
The administrative cost for handling of supplier invoices is substantial. It is therefore
important that all parties involved adapt the most efficient processes, based on EDI solutions.
All Volvo Group paper invoices will be stamped with the arrival date, to secure correct
calculation of payment date (in case when payment date is based upon arrival date).
It is only arrival date at VBS or local accounts payable department which is valid.
Administration of supplier payments
Payments to suppliers should be made with the objective to reduce costs and administration
as well as to minimize timelag and risk of fraud.
Electronic payments directly to the suppliers bank account is Volvo Group´s preferred
payment method. Check payments should be avoided.
Common routines in Volvo Group companies
There is a continuous development within Volvo Group to improve routines and systems in
order to reduce costs and reach optimal efficiency in administration.
The objective is to use the most efficient solutions as the Volvo Group standard and thereby
have a common way of working for the mutual benefit of both Volvo Group and our
counterparties.
Common information to suppliers
Many of Volvo Group suppliers have relations with more than one Volvo Group company. It
is therefore most important that conditions and documentation are co-ordinated and reflect
Volvo Group´s general rules for invoice handling and supplier payments.
Common information for suppliers can be found on Volvo Group Supplier Portal
(www.volvogroup.com/suppliers)
Contract writing
Volvo Group´s General Purchasing Conditions
Volvo Group´s General Purchasing Conditions determine purchase made by Volvo Group
companies. The Purchasing Conditions should be part of the documentation that is agreed
and signed between the parties.
Different purchasing conditions apply to automotive and non-automotive purchases. More
information is available at Volvo Group Supplier Portal (www.volvogroup.com/suppliers).
Invoicing via EDI
Invoices to Volvo Group must be sent via EDI according to Volvo’s specifications, see
www.volvo.com/edi .
Suppliers that send EDI invoices to Volvo Group are not allowed to also send paper invoices
for the same invoice number.
Payment terms
Payment terms are normally calculated based upon receipt of invoice or goods, whichever is
latest. Invoices sent via EDI will generally arrive 1 – 7 days faster than paper invoices.
The supplier payment term policy in Volvo Group is minimum E090 - free month of delivery
based upon receipt of invoice or goods (whichever is the latest) + 3 calendar months of
credit, paid next coming Thursday. More information regarding payment terms are found in
appendix 3 - Payment terms and definitions.
Purchasing currency
A Volvo Group Company´s external purchases should be done in the local currency of the
supplier.
Currency clauses
A currency clause is defined as any price adjustment mechanism, included in a purchasing
or sales contract, designed to adjust for changes in foreign exchange rates
Sales and purchasing agreements must not include currency clauses.
Cash discounts
Cash discounts must not be used within Volvo Group. All price reductions should be included
in the agreed price.
Other Rebates
All kind of rebates/bonuses should be included in the negotiated agreed price.
Additional costs
Additional cost e.g. freight, packaging material, environmental fees, etc. should always be
included in the agreed unit price.
Placing an order
AP (Automotive Purchasing) - Production material
AP buyers use Material Order for production material and spare parts, Tooling Order for
tooling and Sample Order for initial samples.
NAP (Non-Automotive Purchasing) – Indirect material
NAP products are goods and services that are not part of the final products of the Volvo
Group. NAP products should always be procured using purchasing systems approved by
NAP, in which purchase order numbers are generated, e.g. EBD.
Necessary information on supplier invoices
A specification of all necessary information on supplier invoices is found in the document
”Mandatory information to be stated on supplier invoices” in appendix 2.
Invoices that are incomplete according to mandatory information for invoices will be returned
with a specified reason. The supplier should be informed either via letter, mail or phone call.
Payment terms will be calculated from the arrival date of correct invoice.
A general rule is that the invoice should look like the purchase order, e.g. same unit of
measure on the invoice as on the order, same currency on the invoice as on the purchase
order etc.
Some of the basic and most important information needed is described below.
Address
If the invoice is sent to the wrong address, or if necessary information (as specified in
appendix 2) is missing, the invoice will be returned with specified reason. This could lead to
delayed payment.
The invoice should be sent to the address specified in the purchasing order or purchasing
agreement. No personal references or department information should be stated in the
address field.
Parma number / Supplier number
The supplier´s unique Volvo Group identification number (Parma number) should be clearly
stated on the invoice.
Order number
Volvo Group´s purchase order number or workflow reference is mandatory information on
each invoice. Invoices without purchase order number or workflow reference will be returned
with specified reason. Payment terms will be calculated from the arrival date of correct
invoice. Valid workflow reference should be provided by the requester.
The general rule “one delivery note = one invoice” should be applied. Invoices with muliple
purchase order numbers are not allowed.
Corporate identity number (VAT, FID etc…)
The supplier´s corporate identity number, as well as the Volvo Group company´s corporate
identity number, shall be clearly stated on the invoice.
Administrative costs, fees and charges
Volvo Group will not pay invoice fee, administration fee, reminder fee or similar fees and
charges.
Payments to suppliers
A detailed specification of calculation of payment terms and payments can be found in
appedix 3 ”Payment terms and definitions”.
Payment procedure
Payments will only be executed for:
- Registered invoices
- Approved and fully matched invoices and
- Invoices due for payment.
Payments are executed once a week, normally on Thursdays. Deviations due to holidays
may occur.
Payment dates can be found on Volvo Group´s Supplier Portal;
www.volvogroup.com/supplier
Payment method
The prefered payment method for supplier payments from Volvo Group, both domestic and
international, is electronic payments directly to the supplier´s bank account, preferably with
same day valuation. Volvo Group will only pay to one bank account per supplier and
currency.
Payment charge
The payment instruction from Volvo Group to the banks for charges related to international
payments is SHARED. The definition implies that Volvo Group takes the costs that occur in
the sending bank and the supplier takes other costs.
Handling of reminders
Routine
In order to facitilitate handling of reminders the supplier should attach a copy of the original
invoice. This will prevent unnecessary delay of payment.
In view of Volvo Group´s payment routines as described above, we do not expect to receive
reminders or penalty interest invoices concerning invoices due less than 7 days.
Due to administrative costs we do not find it meaningful, neither for the debtor nor for the
creditor, to work with penalty interest invoices with amounts less than the countervalue of
USD 100.
If the prerequsites above regarding interest invoices are met it is important that a separate
interest invoice is sent. It is not allowed to have extra line item with interest charges on the
next ordinary invoice.
Others
Returned Invoices
Invoices that are incomplete according to mandatory information for invoices will be returned
with a specified reason. Payment terms will be calculated from the arrival date of correct
invoice.
Factoring
If the supplier has a factoring agreement Volvo Group will only accept paying all invoices to
the finance company. Confirmation of and changes in the factoring set up should be informed
only from the supplier to Volvo Group.
Appendix 1 – Terms and definitions
Payment term starting with “B” - Credit period based upon receipt of invoice or goods
(whichever is latest), paid next coming Thursday. Payment terms will be calculated from the
arrival date of correct invoice.
Payment term starting with “E” - Free delivery month based on receipt of invoice or goods
(whichever is latest) + X calendar months of credit, paid next coming Thursday. Payment
terms will be calculated from the arrival date of correct invoice.
Payment term starting with “C” - Credit period based upon invoice (document) date, paid
next coming Thursday.
Receipt of goods - receipt of goods is made when the Volvo Group take ownership in
accordance with the delivery term. For services the receipt of goods is equal to when the
service is fulfilled in accordance with the purchasing agreement.
Receipt of invoice - The date for receipt of invoice is the date when the invoice arrives to the
invoicing address specified in the purchasing order or purchasing agreement.
Supplier - is defined as a non-Volvo Group Company (third party) who sell goods and
services to the Volvo Group.
Volvo Supply Chain Financing (SCF)
The supplier gets early payment through sale of invoices to a Volvo Group external finance
company if the Volvo Group has approved the invoice and the delivery.
Appendix 2 – Mandatory Information to be stated on Supplier invoices
1,
2,
3,
4,
The word INVOICE or CREDIT
Invoice date
Invoice number
“Bill to” / Invoicing address (including the correct company name of the customer)
No personal or department information should be stated in the address field.
5, “Ship to” / Delivery address
6, Customer's reference – Purchase Order number or workflow reference
7, Supplier’s name, address and reference
Preferred information to be stated on invoices:
Supplier’s PARMA – number (Sender)
Cus tomer’s PARMA – number (Receiver)
Terms of payment
Payment instructions
When an Automotive Purchasing (AP) order has been placed in a Purchase order system, every
order is connected to a specific suffix. Every Volvo Group company (except Volvo Aero) has its
own specific suffix. The suffix shows where the goods were delivered, for example, to a Volvo
Group goods receiving department or direct to the customer. Only one suffix is permitted per
8, Invoicing currenc y. The invoice needs to have the same currency as the purchase order. invoice.
9, The quantity and/or nature of the goods or services delivered must be stated. To enable
the invoice to be matched successfully with the goods or services, the following
information must be provided on the invoice:
- Volvo- or supplier part number, depending on what is stated in the Purchase
order. If no part number is stated in the order, the item description must clearly
identify the product or service invoiced.
- Number of units, Unit price and total price per item
- Delivery note number with date, specifically for production material
- Occasionally the district number and c hassis number
10, Total invoice amount
11, The supplier’s VAT number
12, The customer's VAT number
Invoices issued within the EU must comply with the sixth VAT 2006/112/EC directive and
therefore the following information is mandatory:
13, VAT-rate applied
14, Value added tax amount specified per rate and the taxable amount per rate or
exemption, the unit price exclusive of tax and any discount or rebates if they are not
included in the unit price
15, If VAT is not charged, reference to “VAT exempt” * or “Revers e Charge“
16, If invoice currency is in other currenc y than local currency, VAT amount should be
stated in both currencies
Invoices in which any of the above information is missing will be returned or the
supplier will be notified of any discrepancy by phone. A new corrected invoice will
be required. This could lead to delayed payments.
Pleas e note that it is mandatory for you to add your IBAN / BIC no on the invoices (if applicable)
Invoices to a VAT agent; Invoices has to be addressed to the Volvo group company’s VAT-agent
in the specific country.
See also information stated on the purchase order from Volvo.
* VAT Exempt
To be used when invoicing not taxable goods and services
To be used when invoicing goods which are delivered from one
EC country to another EC country, if the cus tomer in the other
EC country has a VAT number
VAT Exempt - Export
To be used when invoicing goods which are delivered from
one EC c ountry to a Non EC country
VAT Exempt - Triangulation To be used when invoicing from a Volvo-company who is the
middleman in a triangulation i.e. goods trade between three
parties in different EC countries and the goods is delivered from
the first part to the last part.
No VAT - Reverse charge EC To be used when invoicing all taxable servic es to a customer in
another EC country apart from the following services:
-Real Estate Servic es
-Passenger Transports
-Cultural, Artistic, Sporting, Scientific, Educational, Entertainment
or similar activities, such as fairs and exhibitions.
-Restaurant- and Catering services
-Short-time Rental of car/vehicle (Hiring of means of transport)
No VAT - Reverse charge
To be used when invoicing all taxable services to a customer in
Non EC
Non EC country apart from the following services:
-Real Estate Servic es
-Passenger Transports
-Cultural, Artistic, Sporting, Scientific, Educational, Entertainment
or similar activities, such as fairs and exhibitions.
-Restaurant- and Catering services
-Short-time Rental of car/vehicle (Hiring of means of transport)
No VAT - Domestic reverse To be used by a foreign entity in a EC country when invoicing
charge procedure
goods and some s ervices to a VAT registered customer in the
same EC country.
VAT Exempt
VAT Exempt - EC sale
Appendix 3 - Payment terms and definitions
Example of Payment term
- starting with ”E” for EDI invoices
E090 = Free month of delivery + 3 calendar months of credit, paid next coming Thursday
01/08/2010
Invoice date
30/07/2010
Goods is received
30/07/2010
01/09/2010
EDI Invoice
arrives to Volvo
30/07/2010
Example of payment terms:
In the example above you can see how the payment term starting with “E" works.
In this example we have used payment term E090.
E090 – Free month of delivery based upon receipt of invoice or goods (whichever is
latest) + 3 months of credit, paid next coming Thursday.
Payment Frequency
• Volvo Group units should only execute payments to suppliers once a week
(each Thursday). (0-6 days after net due date).
• Domestic supplier contracts, which are paid in domestic currency, may in
addition be executed each Monday if not contrary to contractual terms. In this
case suppliers will be paid Monday and Thursday (0-3 days after net due date).
01/10/2010
01/11/2010
Net due
according to
payment term
E090
31/10/2010
Payment date
0-6 days after
net due day
(In this specific
example 04/11/2010)
Example of Payment term
- starting with ”E” for paper invoices
E090 = Free month of delivery + 3 calendar months of credit, paid next coming Thursday
01/08/2010
01/09/2010
01/10/2010
01/11/2010
01/12/2010
Invoice date
30/07/2010
Goods is received
30/07/2010
Paper Invoice
arrives to Volvo
02/08/2010
Example of payment terms:
In the example above you can see how the payment term starting with “E" works.
In this example we have used payment term E090.
E090 – Free month of delivery based upon receipt of invoice or goods (whichever is
latest) + 3 months of credit, paid next coming Thursday.
Payment Frequency
• Volvo Group units should only execute payments to suppliers once a week
(each Thursday). (0-6 days after net due date).
• Domestic supplier contracts, which are paid in domestic currency, may in
addition be executed each Monday if not contrary to contractual terms. In this
case suppliers will be paid Monday and Thursday (0-3 days after net due date).
Net due
according to
payment term
E090
30/11/2010
Payment date
0-6 days after
net due day
(In this specific
example 02/12/2010)
Example of Payment term
- starting with ”B” for EDI invoices
B090 = 90 days of credit based upon receipt of invoice or goods (whichever is latest)
01/06/2010
01/07/2010
01/08/2010
01/09/2010
01/10/2010
Invoice date
17/06/2010
EDI Invoice
arrives to Volvo
17/06/2010
Goods is received
17/06/2010
Example of payment terms:
In the example above you can see how the payment term starting with “B" works.
In this example we have used payment term B090.
B090 – 90 days of credit based upon receipt of invoice or goods (whichever is
latest), paid next coming Thursday.
Payment Frequency
• Volvo Group units should only execute payments to suppliers once a week
(each Thursday). (0-6 days after net due date).
• Domestic supplier contracts, which are paid in domestic currency, may in
addition be executed each Monday if not contrary to contractual terms. In this
case suppliers will be paid Monday and Thursday (0-3 days after net due date).
Net due
according to
payment term
B090
15/09/2010
Payment date
0-6 days after
net due day
(In this specific
example 16/09/2010)
Example of Payment term
- starting with ”B” for paper invoices
B090 = 90 days of credit based upon receipt of invoice or goods (whichever is latest)
01/06/2010
Invoice date
17/06/2010
Goods is received
17/06/2010
01/07/2010
01/08/2010
Paper Invoice
arrives to Volvo
21/06/2010
Example of payment terms:
In the example above you can see how the payment term starting with “B" works.
In this example we have used payment term B090.
B090 – 90 days of credit based upon receipt of invoice or goods (whichever is
latest), paid next coming Thursday.
Payment Frequency
• Volvo Group units should only execute payments to suppliers once a week
(each Thursday). (0-6 days after net due date).
• Domestic supplier contracts, which are paid in domestic currency, may in
addition be executed each Monday if not contrary to contractual terms. In this
case suppliers will be paid Monday and Thursday (0-3 days after net due date).
01/09/2010
01/10/2010
Net due
according to
payment term
B090
19/09/2010
Payment date
0-6 days after
net due day
(In this specific
example 23/09/2010)
Example of Payment term
- starting with ”C” for paper invoices
C090 = 90 days of credit based upon invoice date
01/06/2010
Invoice date
17/06/2010
01/07/2010
01/08/2010
Paper Invoice
arrives to Volvo
21/06/2010
Example of payment terms:
In the example above you can see how the payment term starting with "C" works.
In this example we have used payment term C090.
C090 – 90 days of credit based upon invoice date, paid next coming Thursday.
Payment Frequency
• Volvo Group units should only execute payments to suppliers once a week
(each Thursday). (0-6 days after net due date).
• Domestic supplier contracts, which are paid in domestic currency, may in
addition be executed each Monday if not contrary to contractual terms. In this
case suppliers will be paid Monday and Thursday (0-3 days after net due date).
01/09/2010
Net due
according to
payment term
C090
15/09/2010
01/10/2010
Payment date
0-6 days after
net due day
(In this specific
example 16/09/2010)